CHAPTER 3 Business structures 123available at Sunrise Beach, Queensland. With their husbands (Jeoff, who is a builder, and Connell
who is a plumber), they decide to sell their homes in Brisbane and purchase this holiday shack.
They think the potential for the business venture is enormous, but expect that additional capital
will be required over the next five years for their dreams to be realised.
Required
a. Do you think the two families have the necessary skills between them to run such a demanding
venture? List the skills that you think are important.
b. Go to the Queensland government Business and Industry portal at business.qld.gov.au. Click on
‘Starting a business’ and then ‘Meeting legal obligations’. Click on ‘Taxation’. Click on ‘Record
keeping for tax purposes’. What business records should the two partners keep for the next 5 years?
c. Do you think their bank would be happier to lend the families finance to expand, due to the fact
that they are in partnership? Why?3.48 From humble beginnings, Phil expanded his backyard business in Melbourne to produce and sell
sports drink bottles for AFL, cricket, Rugby League and Rugby Union football teams in 2016. Due
to the success of his product and the fact that he was dealing with very wealthy football clubs, he
was advised to form a proprietary company limited by shares so as to maintain his credibility. To
comply with a previous requirement in the Corporations Act (whereby a company requires two
directors), he insisted that his wife Josephine (a school teacher) become a director. Phil was not
renowned for his accounting skills, and he overlooked the group tax liabilities for the company
over the following two years. The case ended up in court, with the Australian Taxation Office
claiming that both Phil and Josephine are jointly liable.
Required
a. Do you think Phil and/or Josephine should be liable for overlooking the tax liabilities for the
company? Why or why not?
b. What responsibilities do you think Phil and Josephine have as directors of the company?References
Australian Accounting Standards Board 2015, ‘An update on the Differential Reporting project’, 12 January,
http://www.aasb.gov.au/admin/file/content102/c3/Differential_Reporting_Project_Update_12_01_2015.pdf.
Boccabella, D 2013, ‘Budget to target high earners’ family trust tax schemes’, The Drum, 25 March, http://www.abc.net.au.
CPA Australia 2014, A guide to understanding the financial reports of not-for-profit entities, p. 6, http://www.cpaaustralia.com.au/~/
media/corporate/allfiles/document/professional-resources/reporting/not-for-profit-guide.pdf.
JB Hi-Fi Ltd 2015, Preliminary annual report 2015, http://www.jbhifi.com.au.
Mobbs, R 2011, ‘Heidi Middleton & Sarah-Jane Clarke’, InTheBlack, August, pp. 29–31.
SME Association of Australia 2011, ‘Small and medium enterprises in Australia’, http://www.smea.org.au.
Acknowledgements
Figures 3.1, 3.2, 3.3: © JB Hi-Fi Ltd.
Reality check: Not-for-profit entities: © CPA Australia.
Reality check: Is it time to get tough on the tax benefits of family trusts?: © The Drum /
Dale Boccabella.
Photo: © Monkey Business Images / Shutterstock.com.
Photo: © Dmitry Kalinovsky / Shutterstock.com.
Photo: © Brendon Thorne / Getty Images Australia.